Chapter 4 Posting to a General Ledger

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Chapter 4Posting to a General Ledger

• define accounting terms related to posting from a
  journal to a general ledger
• identify accounting concepts and practices
  related to posting from a journal to a general
  ledger
• prepare a chart of accounts for a service
  business organized as a proprietorship
• post separate amounts from a journal to a general
  ledger
• post column totals from a journal to a general
  ledger
• analyze and journalize correcting entries

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Lesson 4-1Preparing a Chart of Accounts

• define accounting terms related to posting from a
  journal to a general ledger
• identify accounting concepts and practices
  related to posting from a journal to a general
  ledger
• prepare a chart of accounts for a service
  business organized as a proprietorship

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Account Form

• A journal is a permanent record of the debit and
  credit parts of each transaction with
  transactions recorded in chronological order
• A journal does not show, in one place, all the
  changes in a single account
• If only a journal is used, a business must search
  through all journal pages to find items affecting
  a single account balance.
• A form is used to summarize on one place all the
  changes to a single account
• A separate form is used for each account

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Relationship of a T Account to an Account Form

• An account form is based on and includes the
  debit and credit sides of a T account
• Also provides space for recording the transaction
  date and journal page number
• This information can be used to trace the entry
  back to where the transaction is recorded in a
  journal
• Disadvantage of the account form
• No current, up-to-date account balance is shown
• If you use this form, an up-to-date balance must
  be calculated each time the account is examined

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Relationship of a T Account to an Account Form

• With large number of entries, the balance is
  difficult and time consuming to calculate
• Because of this, a more commonly used account
  form has Debit and Credit Balance columns
• Since it has debit and credit balance columns, it
  is called the balance-ruled account form
• The account balance is calculated and recorded as
  each entry is recorded.
• The balance-ruled account form is more useful
  than the T account as a permanent record of
  changes to account balances

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Chart of Accounts

• Ledger a group of accounts
• General ledger a ledger that contains all
  accounts needed to prepare financial statements
• Account number number assigned to an account
• Preparing a Chart of Accounts
• A list of account titles and numbers showing the
  location of each account in a ledger
• Accounts in a general ledger are arranged in the
  same order as they appear on financial statements
• TechKnows chart of accounts is divided into five
  parts
• Assets, Liabilities, Owners Equity, Revenue, and
  Expenses

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Account Numbers

• TechKnow Consulting assigns three-digit account
  numbers to each account
• Example 150, Supplies
• The first digit shows the general ledger division
  in which the account is located
• Example assets are numbered in the 100s,
  therefore, the number for the asset account,
  Supplies, begins with a 1
• The second two digits indicate the location of
  each account, within a general ledger division
  the 50 indicated that the account is located
  between account number 140 and account number 160

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Assigning Account Numbers

• TechKnow Consulting assigns account numbers by
  10s, so that new accounts can be added easily
• Nine numbers are unused between each account on
  the chart of accounts
• File maintenance the procedures for arranging
  accounts in a general ledger, assigning account
  numbers, and keeping records current
• Accounts are usually arranged in alphabetic order
• When an account is no longer needed it is removed
  form the general ledger and the chart of
  accounts, it can now be assigned to another
  account if needed

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Opening an Account in a General Ledger

• Opening an account writing an account title and
  number on the heading of an account
• A general ledger account is opened for each
  account listed on a chart of accounts. Accounts
  are opened and arranged in a general ledger in
  the same order as on the chart of accounts
• STEPS Opening an account in a general ledger
• Write the account title, after the word Account
  in the heading
• Write the account number, after the words Account
  Number in the heading